Reserve Bank of Australia cuts rate by 25 basis points, remains open for further easing

Reserve Bank of Australia cut its cash rate by 25 basis points to 3.85% from 4.10%, in its May policy meeting.

Today’s decision was in line with expectations and the policymakers argued it by colling inflation as well as easing uncertainty after the US and China reached a trade agreement that slashed massive initial tariffs.

The central bank signaled that it may remain on track for further policy easing, should favorable conditions persist.

In the post-meeting press conference, RBA Governor Michele Bullock said the board weighed holding rates steady and cutting but mentioned that 50 basis rate cut was also on the table.

In comparison to more hawkish rhetoric after rate cut in February, Governor Bullock said the situation has changed, that opens the door for more optimistic view, although pointed to still uncertain outlook and highlighted the central bank’s policy remains well placed to respond decisively to potential risks.